Strong 25.4% Increase in Net Revenue Year-Over-Year with Third
Quarter Net Revenue Exceeding Guidance Live Conference Call to be
Held Tuesday, November 25, 2008 at 8 a.m. (Eastern) / 5 a.m.
(Pacific) / 9 p.m. (Beijing/Hong Kong) BEIJING, Nov. 24
/PRNewswire-Asia-FirstCall/ -- ChinaEdu Corporation (NASDAQ:CEDU)
("ChinaEdu" or the "Company"), an educational services provider in
China, today announced its unaudited financial results for the
quarter ended September 30, 2008.(1) (1) This announcement contains
translations of certain Renminbi ("RMB") amounts into U.S. dollar
("$") amounts at specified rates solely for the convenience of the
reader. Unless otherwise stated, all translations from RMB to U.S.
dollars were made at the rate of RMB6.7899 to $1.00, the noon
buying rate in effect on September 30, 2008 in The City of New York
for cable transfers of RMB as certified for customs purposes by the
Federal Reserve Bank of New York. The Company makes no
representation that the RMB or U.S. dollar amounts referred to
could be converted into U.S. dollars or RMB, as the case may be, at
any particular rate or at all. For analytical presentation, all
percentages are calculated using the numbers presented in the
financial statements contained in this earnings release. An
explanation of the Company's non-GAAP financial measures is
included in the section entitled "Non-GAAP Financial Measures"
below, and the related reconciliations to GAAP financial measures
are presented in the accompanying financial statements. Third
Quarter 2008 Highlights 3 Months Ended September September Year
over Period Ending 30, 2007 30, 2008 Year % Currency in thousands
RMB RMB Financial Data: Net revenue 65,412 82,004 25.4% Gross
profit 35,647 50,803 42.5% Goodwill impairment 16,192 17,857 10.3%
Income (loss) from operations (11,696) (1,484) N/A Adjusted income
(loss) from operations (Non-GAAP) 11,874 21,442 80.6% Adjusted
EBITDA (Non-GAAP) 14,004 24,589 75.6% Net income (loss) (19,424)
(15,309) N/A Adjusted net income (loss) (Non-GAAP) 3,237 7,423
129.3% Operating Data: Revenue students for online degree program
services 100,000 125,000 25.0% -- Total net revenue increased by
25.4% to RMB82.0 million ($12.1 million) in the third quarter, as
compared to RMB65.4 million in the corresponding quarter of 2007.
-- Net revenue from online degree programs increased by 34.4% to
RMB65.4 million ($9.6 million) in the third quarter, as compared to
RMB48.6 million in the corresponding quarter of 2007. Revenue from
online degree program services in the third quarter of 2008
continued to benefit from a 25% year-over-year increase in spring
semester enrollments to 125,000 students in 2008 from 100,000
students in the spring semester of 2007. -- Gross margin increased
to 62.0% in the third quarter, as compared to 54.5% in the
corresponding period of 2007. -- Gross margin for the online degree
programs also increased to 70.5% in the third quarter, as compared
to 61.9% in the corresponding quarter of last year. -- A goodwill
impairment charge of RMB17.9 million ($2.6 million) with respect to
our international curriculum program was incurred in the third
quarter. The goodwill impairment is a one-time, non-cash charge and
management does not believe the fundamental operations of the
program have been affected by the impairment. -- Income (loss) from
operations in the third quarter was a loss of RMB1.5 million (-$0.2
million), which improved significantly compared to a loss of
RMB11.7 million in the corresponding period of 2007, despite being
negatively impacted by a goodwill impairment charge of RMB17.9
million ($2.6 million) with respect to the international curriculum
program. -- Adjusted income from operations, which is a non-GAAP
measure defined as income from operations excluding certain
non-cash items, including share-based compensation, amortization,
goodwill impairment, one-time accounts receivable write-off (in the
third quarter of 2007), and currency exchange loss, increased to
RMB21.4 million ($3.2 million) in the third quarter of 2008 as
compared to RMB11.9 million in the corresponding period in 2007.
Adjusted operating margin (adjusted income from operations as a
percentage of net revenue) thus expanded significantly to 26.1% in
the third quarter, as compared to 18.2% in the corresponding
quarter in 2007. -- Adjusted EBITDA, which is a non-GAAP measure
defined as earnings before minority interest, interest, taxes,
depreciation, amortization, share-based compensation, goodwill
impairment, one- time accounts receivable write-off (in the third
quarter of 2007), and currency exchange loss, increased by 75.6% to
RMB24.6 million ($3.6 million) in the third quarter, as compared to
RMB14.0 million in the third quarter of 2007. Adjusted EBITDA
margin (adjusted EBITDA as a percentage of net revenue) also
expanded significantly to 30.0% as compared to 21.4% in the
corresponding period in 2007. -- Net income in the third quarter
was a loss of RMB15.3 million (-$2.3 million), which improved by
RMB4.1 million as compared to a loss of RMB19.4 million in the
third quarter of 2007, despite the negative impact of the goodwill
impairment charge discussed above. -- Adjusted net income, a
non-GAAP measure defined as net income share- based compensation,
amortization, goodwill impairment, one-time accounts receivable
write-off (in the third quarter of 2007), and currency exchange
loss, increased to RMB7.4 million ($1.1 million) in the third
quarter, as compared to RMB3.2 million in the corresponding period
in 2007. -- For the nine months ended September 30, 2008, total net
revenue increased by 24.7% to RMB231.2 million ($34.0 million) and
gross margin increased to 65.9%, as compared to RMB185.4 million
and 61.3%, respectively, for the nine months ended September 30,
2007. "We are pleased to report another quarter of strong execution
and consistent growth. Despite a non-cash goodwill impairment
charge incurred during the third quarter, our third quarter
financial results reflect strong underlying operations and our
ability to continue to deliver strong results," said Ms. Julia
Huang, ChinaEdu's Chairman and Chief Executive Officer. "Our 62.0%
gross margin was fueled mainly by our online degree program, which
recorded a gross margin of 70.5% for the quarter and 74.1% for the
first nine months of the year." "In addition, we continued to
expand our learning center network. By the end of the third
quarter, we increased our franchised learning center network to 23,
as compared to 12 at the end of the second quarter of 2008, and our
total number of learning centers (including our 10 proprietary
learning centers) increased to 33. Furthermore, as previously
disclosed in July, we signed recruiting and technology contracts
with eight new universities during the third quarter, and we
recently signed one more contract since the end of the quarter with
Xiamen University. We are also very pleased to announce that this
month we signed a long-term exclusive agreement with Guangxi Radio
and Television University to build learning centers, which we
believe will help us build our learning center network in Guangxi
province," Ms. Huang added. Financial Results for the Third Quarter
Ended September 30, 2008 Net Revenue Total net revenue for the
third quarter of 2008 was RMB82.0 million ($12.1 million),
representing an increase of 25.4% as compared to the corresponding
period in 2007. Net revenue from online degree programs, the
Company's core business segment, was RMB65.4 million ($9.6 million)
for the third quarter of 2008, representing a 34.4% increase
compared with RMB48.6 million for the corresponding period in 2007.
This increase was primarily attributable to the continued benefit
of our strong spring semester enrollments in which revenue
students(2) increased by 25% year-over-year from 100,000 students
in spring semester of 2007 to 125,000 students in the spring
semester of 2008. (2) "Revenue students" refer to students of the
university online degree programs that have paid tuition during the
applicable period. Net revenue from our private primary secondary
schools also recorded strong growth, primarily attributable to the
completion of Anqing School's new campus construction, which
resulted in increased fall semester enrollments. Net revenue for
this segment for the third quarter was RMB4.9 million ($0.7
million), representing an increase of 40.5% as compared to the
third quarter of 2007. Net revenue from the online tutoring
programs was RMB3.6 million ($0.5 million) for the third quarter,
representing a 17.1% decrease from RMB4.4 million in the third
quarter of 2007. The decrease was primarily attributable to a
reorganization at the division which in the short term led to a
negative impact on net revenue. Net revenue from the international
curriculum division was RMB8.2 million ($1.2 million) for the third
quarter of 2008, representing an 8.7% decrease from RMB9.0 million
for the corresponding period in 2007 due to a loss of certain
partners as a result of the new government regulatory environment.
We are seeking new partners for the international curriculum
program in order to maintain future growth of the segment. Cost of
revenue Total cost of revenue was RMB31.2 million ($4.6 million)
for the third quarter, representing an increase of 4.8% as compared
to RMB29.8 million in the corresponding period in 2007. Cost of
revenue for online degree programs was RMB19.3 million ($2.8
million) in the third quarter, representing an increase of 3.8% as
compared to RMB18.6 million in the third quarter of 2007. When
compared to the 34.4% increase in revenue from online degree
programs, the increase in cost of revenue was much smaller and our
gross margin continued to expand significantly, which further
demonstrates the scalability of our online service model. Cost of
revenue for non-online degree program services was RMB11.9 million
($1.8 million) in the third quarter of 2008, representing a 6.5%
increase from RMB11.2 million in the third quarter of 2007. This
moderate increase was attributable primarily to a one-time benefit
payment for faculty members at one of our private schools. Gross
Profit Gross profit for the third quarter of 2008 was RMB50.8
million ($7.5 million), representing a gross margin of 62.0%, which
represents a significant increase as compared to gross profit and
gross margin of RMB35.6 million and 54.5%, respectively, in the
third quarter of 2007. The increase in gross margin for the third
quarter was primarily due to profit margin improvement in the
Company's online degree program, which improved to 70.5% in the
third quarter, as compared to 61.9% in the third quarter of 2007.
Operating Expenses Total operating expenses were RMB52.3 million
($7.7 million) for the third quarter, representing a 10.4% increase
as compared to RMB47.3 million for the corresponding period in
2007. This increase was attributable primarily to an increase in
our selling and marketing expenses. -- General and administrative
(G&A) expenses were RMB20.2 million ($3.0 million) for the
third quarter, which represented a minor decrease from RMB20.8
million for the third quarter of 2007. -- Selling and marketing
expenses were RMB8.8 million ($1.3 million) for the third quarter,
representing an increase of 85.7% from RMB4.7 million for the
corresponding period in 2007. This increase is attributable
primarily to a television marketing campaign for our online
tutoring programs as well as a one-time marketing event at one of
our collaborative alliances.(3) (3) "Collaborative alliance" or
"Collaborative alliances" refer to the subsidiary or subsidiaries
that the Company formed with certain university partners to provide
services to their online degree programs, which subsidiaries are
majority owned by the Company. -- Research and development
(R&D) expenses for the third quarter were RMB5.5 million ($0.8
million), which remained relatively flat as compared to RMB5.6
million for the corresponding period in 2007. -- A goodwill
impairment charge was incurred with respect to the international
curriculum program in the third quarter, which resulted in a
one-time, non-cash charge of RMB17.9 million ($2.6 million). In
assessing whether a charge for impairment with respect to the
international curriculum program was required, the Company used
both the income approach and market approach to determine the fair
value of the program. For the income approach, the Company reduced
its prior growth projections for the international curriculum
programs due to new government regulatory environment in place
since 2007, which caused a decrease in the number of local school
partners. Management is currently seeking new partners for the
program and believes that the long-term growth of the international
curriculum program can be maintained. For the market approach,
current stock performance of selected U.S. publicly traded
competitors was weighed in the assessment of the fair value of the
international curriculum programs. As a result of the overall stock
market decline, these competitors' lower per share stock valuations
contributed to a decreased fair value assessment of the
international curriculum program. Despite the goodwill impairment
charge, management continues to believe in the fundamentals of the
international curriculum program and the program has continued to
provide positive cash flows. -- Share-based compensation, which was
allocated to the related cost of revenue and operating expense line
item, was RMB1.5 million ($0.2 million) in the third quarter,
representing a 26.6% increase from RMB1.2 million for the
corresponding period in 2007. This was attributable to an increase
in the number of options granted in the first quarter of 2008,
which in turn increased share-based compensation for the third
quarter of 2008, as compared for the corresponding period in 2007.
Income (loss) from Operations Loss from operations was RMB1.5
million (-$0.2 million) for the third quarter, which improved
significantly as compared to a loss of RMB11.7 million for the
corresponding period in 2007. Adjusted income from operations
excluding share-based compensation, amortization of intangible
assets, goodwill impairment, one-time accounts receivable write-off
(in the third quarter of 2007), and currency exchange loss,
increased by 80.6% to RMB 21.4 million ($3.2 million) for the third
quarter, as compared to RMB11.9 million in the corresponding period
in 2007. Adjusted operating margin expanded significantly to 26.1%
in the third quarter, as compared to 18.2% in the corresponding
quarter in 2007. We believe these non-GAAP measures of adjusted
income from operations and adjusted operating margin measures are
helpful to investors as a measure of our operational performance.
Interest income Interest income increased by 350.8% to RMB2.3
million ($0.3 million) in the third quarter, as compared to RMB0.5
million in the corresponding quarter of 2007. This increase was
attributable primarily to the interest income earned on the net
proceeds from the Company's initial public offering completed in
December 2007. Income Tax Expense and Minority Interest Income tax
expense for the third quarter was RMB8.8 million ($1.3 million),
representing a 250.1% increase from RMB2.5 million for the
corresponding period in 2007. Most of our subsidiaries and
affiliate companies were qualified under prior tax laws and
regulations as "new and high technology enterprises," and therefore
received certain tax exemptions and a preferential tax rate. Under
the new Chinese Enterprise Income Tax Regulation, which became
effective in 2008, the statutory tax rate for all enterprises in
China is 25%, except for enterprises who have obtained the newly
implemented "new and high technology enterprises" status in order
to qualify for the 15% preferential tax rate. We are in the process
of re- applying for the newly implemented "new and high technology
enterprise" status; however, until we receive official approval of
this status, the Company must use the 25% statutory tax rate
instead of the current preferential tax rate. As a result, the
effective income tax rate applicable to the Company has been
significantly higher in the third quarter of 2008 than during the
corresponding period in 2007. Minority interest was RMB7.4 million
($1.1 million) in the third quarter, representing a 46.0% increase,
as compared to RMB5.1 million in the corresponding period in 2007,
primarily attributable to the increased profitability of our
collaborative alliances. Net Income ChinaEdu reported a net loss of
RMB15.3 million (-$2.3 million) in the third quarter, which
improved from a loss of RMB19.4 million in the corresponding period
in 2007. The loss in the third quarter was attributable primarily
to the goodwill impairment charge and the adoption of the new
income tax rate, both as discussed above. Diluted earnings per
ordinary share for the third quarter of 2008 were a loss of RMB0.26
(-$0.04) and improved by RMB0.21 per share, as compared to a loss
of RMB0.47 in the corresponding period of 2007, which change was
primarily attributable to higher net revenue gross margin and
operating margin during the third quarter of 2008. Adjusted net
income, which is a non-GAAP measure defined as net income excluding
share-based compensation, amortization, goodwill impairment, one-
time accounts receivable write-off (in the third quarter of 2007),
and currency exchange loss, increased to RMB7.4 million ($1.1
million) for the third quarter, as compared to RMB3.2 million in
the corresponding period of 2007. Deferred Revenue Deferred revenue
at the end of the third quarter of 2008 was RMB33.2 million ($4.9
million), with current deferred revenue of RMB25.9 million ($3.8
million) and non-current deferred revenue of RMB7.3 million ($1.1
million). Deferred revenue at the end of the third quarter
decreased significantly compared to deferred revenue of RMB86.8
million at the end of the second quarter 2008, due to the
seasonality of enrollments, which results in tuition being received
generally during the second quarter (spring term) and the fourth
quarter (fall term) of each year. Cash and Cash Equivalents As of
September 30, 2008, ChinaEdu reported cash and cash equivalents of
RMB303.3 million ($44.7 million), which primarily consisted of
cash-on-hand, demand deposits and term deposits with maturity
periods of three months or less. Term Deposit and Amount Due from
Related Parties Term deposits and the amount due from related
parties (which represents cash owed to us by our collaborative
alliance partners) amounted to RMB104.5 million ($15.4 million) and
RMB127.5 million ($18.8 million), respectively, at September 30,
2008. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA was RMB24.6
million ($3.6 million) for the third quarter, representing an
increase of 75.6% as compared to RMB14.0 million in the third
quarter of 2007. Adjusted EBITDA margin expanded significantly to
30.0% as compared to 21.4% in the corresponding period in 2007.
Year-to-Date Financial Results For the nine months ended September
30, 2008, the Company reported total net revenue of RMB231.2
million ($34.0 million), representing an increase of 24.7%, as
compared to RMB185.4 million in the corresponding period in 2007,
which was primarily driven by strong enrollment growth at our
online degree programs. Total net revenue for the nine months ended
September 30, 2008 consisted of RMB185.4 million ($27.3 million) in
net revenue from online degree programs and RMB45.7 million in net
revenue from non-online degree programs. For the first nine months
of 2008, total cost of revenue was RMB78.7 million ($11.6 million),
representing an increase of 9.6%, as compared to RMB71.8 million in
the corresponding period in 2007. Gross profit of RMB152.4 million
($22.5 million) was 65.9% of total revenue for the first nine
months of 2008, as compared to RMB113.6 million, or 61.3% of total
revenue, for the first nine months of 2007. Total operating
expenses were RMB118.2 million ($17.4 million), representing an
increase of 28.5%, as compared to RMB92.0 million for the first
nine months of 2007. Adjusted income from operations excluding
share-based compensation, amortization, goodwill impairment,
one-time accounts receivable write-off (in the third quarter of
2007), and currency exchange gain or loss increased to RMB63.7
million ($9.4 million) for the nine months ended September 30,
2008, representing an increase of 25.7% from RMB50.7 million in the
first nine months of 2007. ChinaEdu reported a net loss of RMB4.0
million (-$0.6 million) in the first nine months of 2008, which
improved significantly as compared to a net loss of RMB7.0 million
in the first nine months of 2007. Diluted earnings per ordinary
share for the nine months ended September 30, 2008 were a loss
RMB0.07, which improved by RMB0.10 per share, as compared to a loss
of RMB0.17 per share for the nine months ended September 30, 2007.
2008 Fourth Quarter Total Net Revenue Guidance ChinaEdu expects its
total net revenue in the fourth quarter of 2008 to be in the range
of RMB82 million ($12.0 million) to RMB85 million ($12.4 million).
This forecast reflects ChinaEdu's current and preliminary view,
which is subject to change. Conference Call ChinaEdu senior
management will host a conference call on Tuesday, November 25,
2008 at 8:00 a.m. U.S. Eastern time / 5:00 a.m. U.S. Pacific time /
9:00 p.m. Beijing/Hong Kong time. Dial-in information for the live
earnings conference call is as follows: +1-866-202-3048 (U.S.) /
+1-617-213-8843 (International), and entering the passcode: CEDU. A
telephone replay of the conference call will be available until
December 2, 2008 by dialing +1-888-286-8010 (U.S.) or
1.617.801.6888 (International) and entering passcode: 59657267. A
live and archived webcast may also be accessed via the Internet at
http://ir.chinaedu.net/ . Non-GAAP Financial Measures To supplement
the unaudited condensed consolidated financial information
presented in accordance with Accounting Principles Generally
Accepted in the United States of America ("GAAP"), the Company uses
non-GAAP measures of income from operations and net income, which
are adjusted from results based on GAAP to exclude certain non-cash
items of share-based compensation, amortization of intangible
assets, goodwill impairment, one-time accounts receivable write-off
and currency exchange loss. The Company also uses adjusted EBITDA,
which is also a non-GAAP measure and is adjusted from GAAP results
of net income to exclude minority interest, interest, taxes,
depreciation, amortization, share-based compensation, goodwill
impairment, one-time accounts receivable write-off and currency
exchange loss. These non- GAAP financial measures are provided to
enhance the investors' overall understanding of the Company's
current and past financial performance in on- going core operations
as well as prospects for the future. These measures should be
considered in addition to results prepared and presented in
accordance with GAAP, but should not be considered a substitute for
or superior to GAAP results. Management considers the non-GAAP
information as important measures internally and therefore deems it
important to provide all of this information to investors. About
ChinaEdu ChinaEdu Corporation is an educational services provider
in China, incorporated as an exempted limited liability company in
the Cayman Islands. Established in 1999, the Company's primary
business is to provide comprehensive services to the online degree
programs of leading Chinese universities. These services include
academic program development, technology services, enrollment
marketing, student support services and finance operations. The
Company's other lines of businesses include the operation of
private primary and secondary schools, online interactive tutoring
services and providing marketing and support for international
curriculum programs. The Company believes it is the largest service
provider to online degree programs in China in terms of the number
of higher education institutions that are served and the number of
student enrollments supported. The Company currently has strategic
relationships with 22 universities to operate online degree
programs, 12 of which are under long-term, exclusive contracts that
vary from 15 to 50 years in length. Forward-Looking Statement This
press release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995,
including certain plans, expectations, goals, and projections,
which are subject to numerous assumptions, risks, and
uncertainties. Forward-looking statements involve known and unknown
risks, uncertainties and contingencies, many of which are beyond
our control which may cause actual results, levels of activity,
performance or achievements to differ materially from any future
results, levels of activity, performance or achievements expressed
or implied by such forward-looking statements. The Company's actual
results could differ materially from those contained in the
forward-looking statements due to a number of factors, including
those described under the heading "Risk Factors" in the Company's
final prospectus filed with the Securities and Exchange Commission
on December 11, 2007, and in documents subsequently filed by the
Company from time to time with the Securities and Exchange
Commission. Unless required by law, the Company undertakes no
obligation to (and expressly disclaim any such obligation to)
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. ChinaEdu
Corporation Unaudited Condensed Consolidated Balance Sheets
December September September (in thousands) 31,2007 30,2008 30,2008
RMB RMB US$ Current assets: Cash and cash equivalents 497,114
303,329 44,674 Accounts receivable, net 1,238 5,555 818 Term
deposit 6,042 104,500 15,391 Prepaid expenses and other current
assets 17,492 18,886 2,781 Amounts due from related parties 105,522
127,481 18,775 Deferred tax assets 9,521 597 88 Total current
assets 636,929 560,348 82,527 Cost method investment 1,210 1,210
178 Land use rights, net 26,949 26,525 3,907 Property and
equipment, net 130,745 161,111 23,728 Deposits paid for acquisition
of property and equipment 2,025 6,003 884 Intangible assets, net
105,852 102,746 15,132 Deferred tax assets 1,416 1,416 209 Rental
deposits 1,623 1,065 157 Goodwill 73,319 61,334 9,033 Total assets
980,068 921,758 135,755 Liabilities, minority interest and
shareholders' equity Current liabilities: Accounts payable 2,773
8,312 1,224 Deferred revenues 83,816 25,946 3,821 Accrued expenses
and other current liabilities 42,096 35,393 5,213 Amounts due to
related parties 28,316 59,070 8,700 Income taxes payable 22,455
32,473 4,783 Other taxes payable 6,666 6,721 990 Total current
liabilities 186,122 167,915 24,731 Long term debt 25,724 -- --
Deferred revenues 3,124 7,254 1,068 Deferred tax liabilities 24,036
23,310 3,433 Unrecognized tax benefit 4,332 4,601 678 Total
liabilities 243,338 203,080 29,910 Minority interests 57,996 74,294
10,942 Total shareholders' equity 678,734 644,384 94,903 Total
liabilities, minority interest, and shareholders' equity 980,068
921,758 135,755 ChinaEdu Corporation Unaudited Condensed
Consolidated Statements of Operations Three Months Ended (in
thousands, except for percentage and share, per September June
September September share information) 30,2007 30,2008 30,2008
30,2008 RMB RMB RMB US$ Net Revenue: Online degree programs 48,647
65,124 65,359 9,626 International curriculum programs 8,957 6,587
8,178 1,204 Online tutoring programs 4,351 4,078 3,609 532 Private
primary and secondary schools 3,457 3,732 4,858 715 Total net
revenue 65,412 79,521 82,004 12,077 Cost of revenue: Online degree
programs 18,557 13,461 19,266 2,837 International curriculum
programs 7,528 5,674 5,949 876 Online tutoring programs 1,031 995
852 125 Private primary and secondary schools 2,649 3,249 5,134 756
Total cost of revenue 29,765 23,379 31,201 4,594 Gross profit:
Online degree programs 30,090 51,663 46,093 6,789 International
curriculum programs 1,429 913 2,229 328 Online tutoring programs
3,320 3,083 2,757 407 Private primary and secondary schools 808 483
(276) (41) Total gross profit 35,647 56,142 50,803 7,483 Online
degree programs 61.9% 79.3% 70.5% 70.5% International curriculum
programs 16.0% 13.9% 27.3% 27.3% Online tutoring programs 76.3%
75.6% 76.4% 76.4% Private primary and secondary schools 23.4% 12.9%
-5.7% -5.7% Gross margin 54.5% 70.6% 62.0% 62.0% Operating
expenses: General and administrative 20,824 20,404 20,150 2,968
Selling and marketing 4,722 7,017 8,770 1,292 Research and
development 5,605 5,830 5,510 811 Goodwill impairment 16,192 --
17,857 2,630 Total operating expenses 47,343 33,251 52,287 7,701
Income (loss) from operations (11,696) 22,891 (1,484) (218)
Operating margin -17.9% 28.8% -1.8% -1.8% Other income (expense) --
-- -- -- Other non operating income -- 2,116 121 18 Interest income
516 2,605 2,326 343 Interest expense (674) (585) (106) (16) Income
(loss) before income tax provisions and minority interest (11,854)
27,027 857 127 Income tax expense (2,505) (9,425) (8,769) (1,291)
Minority interest, net of taxes (5,065) (8,415) (7,397) (1,089) Net
income (loss) (19,424) 9,187 (15,309) (2,253) Net margin -29.7%
11.6% -18.7% -18.7% Net income (loss) per share: Basic (0.47) 0.16
(0.26) (0.04) Diluted (0.47) 0.15 (0.26) (0.04) Net income (loss)
per ADS: Basic (1.41) 0.48 (0.78) (0.12) Diluted (1.41) 0.45 (0.78)
(0.12) Weighted average aggregate number of ordinary shares
outstanding: Basic 41,722,746 58,434,407 57,913,939 57,913,939
Diluted 41,722,746 61,813,068 57,913,939 57,913,939 (Cont.) Nine
Months Ended (in thousands, except for percentage September
September September and share, per share information) 30,2007
30,2008 30,2008 RMB RMB US$ Net Revenue: Online degree programs
137,372 185,443 27,312 International curriculum programs 24,794
22,307 3,285 Online tutoring programs 13,525 10,964 1,615 Private
primary and secondary schools 9,684 12,466 1,836 Total net revenue
185,375 231,180 34,048 Cost of revenue: Online degree programs
42,298 48,029 7,074 International curriculum programs 18,840 16,388
2,414 Online tutoring programs 3,155 2,574 379 Private primary and
secondary schools 7,530 11,744 1,730 Total cost of revenue 71,823
78,735 11,597 Gross profit: Online degree programs 95,074 137,414
20,238 International curriculum programs 5,954 5,919 871 Online
tutoring programs 10,370 8,390 1,236 Private primary and secondary
schools 2,154 722 106 Total gross profit 113,552 152,445 22,451
Online degree programs 69.2% 74.1% 74.1% International curriculum
programs 24.0% 26.5% 26.5% Online tutoring programs 76.7% 76.5%
76.5% Private primary and secondary schools 22.2% 5.8% 5.8% Gross
margin 61.3% 65.9% 65.9% Operating expenses: General and
administrative 50,787 61,469 9,053 Selling and marketing 10,786
21,649 3,188 Research and development 14,203 17,238 2,539 Goodwill
impairment 16,192 17,857 2,630 Total operating expenses 91,968
118,213 17,410 Income (loss) from operations 21,584 34,232 5,041
Operating margin 11.6% 14.8% 14.8% Other income (expense) 394 -- --
Other non operating income -- 2,388 352 Interest income 1,720 7,679
1,131 Interest expense (1,655) (1,297) (191) Income (loss) before
income tax provisions and minority interest 22,043 43,002 6,333
Income tax expense (12,484) (23,094) (3,401) Minority interest, net
of taxes (16,509) (23,943) (3,526) Net income (loss) (6,950)
(4,035) (594) Net margin -3.7% -1.7% -1.7% Net income (loss) per
share: Basic (0.17) (0.07) (0.01) Diluted (0.17) (0.07) (0.01) Net
income (loss) per ADS: Basic (0.51) (0.21) (0.03) Diluted (0.51)
(0.21) (0.03) Weighted average aggregate number of ordinary shares
outstanding: Basic 41,178,412 58,259,651 58,259,651 Diluted
41,178,412 58,259,651 58,259,651 ChinaEdu Corporation Unaudited
Condensed Consolidated Statements of Cash Flow Three Months Ended
September June September September (in thousands) 30,2007 30,2008
30,2008 30,2008 RMB RMB RMB US$ Operating activities: Net income
(19,424) 9,187 (15,309) (2,253) Minority interest 5,065 8,415 7,397
1,089 Share-based compensation 1,180 1,671 1,494 220 Depreciation
1,997 2,903 3,005 443 Amortization of land use rights 133 141 142
21 Amortization of intangible assets 2,167 2,262 2,142 315 Goodwill
impairment 16,192 -- 17,857 2,630 Accounts receivable write- off
4,031 -- -- -- FA write down 688 -- -- -- Other income -- -- -- --
Interest expense (1,151) -- -- -- Deferred income taxes 523 1,281
787 116 Accounts receivable 625 (12,324) 8,167 1,203 Prepaid
expenses and other current assets (2,889) 8,093 3,610 532 Amounts
due from related parties 16,123 (98,677) 41,085 6,051 Rental
deposits (272) (266) (4) (1) Accounts payable (776) 91 190 28
Deferred revenues (46,668) 57,371 (53,603) (7,895) Accrued expenses
and other current liabilities (4,542) 2,283 1,629 240 Amounts due
to related parties 6,350 24,705 12,081 1,779 Unrecognized tax
benefit 134 136 -- -- Other taxes payable 437 2,156 2,206 325
Income tax payable 1,847 7,970 9,229 1,359 Net cash provided by
(used in) operating activities (18,230) 17,398 42,105 6,202
Investing activities: Purchase of business -- (4,000) (2,700) (398)
Purchase of land use right (694) -- -- -- Purchase of property and
equipment (7,910) (11,240) (11,853) (1,746) Deposits paid for
acquisition of property and equipment (1,952) (979) (5,024) (740)
Purchase of term deposit 40,853 (25,000) (71,500) (10,530) Purchase
of contractual right -- (1,225) -- -- Proceeds from disposal of
property and equipment -- -- -- -- Net cash used in investing
activities 30,297 (42,444) (91,077) (13,414) Financing activities:
Proceeds from issuance of Series D convertible preferred shares
18,187 -- -- -- Proceeds from excerise of warrants 2,261 -- -- --
Collection of subscription receivable 1,207 -- -- -- Repurchase of
ordinary shares (12,901) -- (14,725) (2,169) Repurchase of series B
(640) -- -- -- Repayment of convertible notes -- -- -- -- Repayment
of long-term loan -- (1,091) (23,568) (3,472) Cash dividends paid
to minority shareholders -- -- (4,050) (596) Capital contributions
by minority shareholders -- 1,225 -- -- Proceeds from excerise of
options -- -- 404 60 Prepayment for share repurchase -- -- (5,751)
(847) Issurance of ordinary shares -- -- -- -- Net cash provided by
(used in) financing activities 8,114 134 (47,690) (7,024) Effect of
foreign exchange rate changes (160) (6,330) (746) (110) CASH AND
CASH EQUIVALENTS, beginning of period 108,813 431,979 400,737
59,020 CASH AND CASH EQUIVALENTS, end of period 128,834 400,737
303,329 44,674 Net increase (decrease) in cash 20,021 (31,242)
(97,408) (14,346) (Cont.) Nine Months Ended September September
September (in thousands) 30,2007 30,2008 30,2008 RMB RMB US$
Operating activities: Net income (6,950) (4,035) (594) Minority
interest 16,509 23,943 3,526 Share-based compensation 2,495 3,548
523 Depreciation 5,998 8,642 1,273 Amortization of land use rights
392 424 62 Amortization of intangible assets 6,381 6,659 981
Goodwill impairment 16,192 17,857 2,630 Accounts receivable write-
off 4,031 -- -- FA write down 688 -- -- Other income (394) -- --
Interest expense (170) -- -- Deferred income taxes 5,257 7,924
1,167 Accounts receivable 11,153 (4,320) (636) Prepaid expenses and
other current assets (10,273) 4,317 636 Amounts due from related
parties (2,341) (22,003) (3,241) Rental deposits (951) 558 82
Accounts payable (5,104) 134 20 Deferred revenues (51,044) (53,715)
(7,911) Accrued expenses and other current liabilities (1,041)
(6,202) (913) Amounts due to related parties 15,630 24,734 3,643
Unrecognized tax benefit 454 269 40 Other taxes payable 731 55 8
Income tax payable 449 10,017 1,475 Net cash provided by (used in)
operating activities 8,092 18,806 2,771 Investing activities:
Purchase of business (22,520) (6,700) (987) Purchase of land use
right (694) -- -- Purchase of property and equipment (25,018)
(31,578) (4,651) Deposits paid for acquisition of property and
equipment (28,624) (6,034) (889) Purchase of term deposit (200)
(98,458) (14,501) Purchase of contractual right (3,430) (1,225)
(180) Proceeds from disposal of property and equipment -- 31 5 Net
cash used in investing activities (80,486) (143,964) (21,203)
Financing activities: Proceeds from issuance of Series D
convertible preferred shares 72,259 -- -- Proceeds from excerise of
warrants 2,261 -- -- Collection of subscription receivable 2,324 --
-- Repurchase of ordinary shares (62,948) (14,725) (2,169)
Repurchase of series B (640) -- -- Repayment of convertible notes
(3,151) -- -- Repayment of long-term loan -- (25,724) (3,789) Cash
dividends paid to minority shareholders (7,230) (4,050) (596)
Capital contributions by minority shareholders 2,030 1,225 180
Proceeds from excerise of options -- 404 60 Prepayment for share
repurchase -- (5,751) (847) Issurance of ordinary shares 48,447 --
-- Net cash provided by (used in) financing activities 53,352
(48,621) (7,161) Effect of foreign exchange rate changes (439)
(20,006) (2,947) CASH AND CASH EQUIVALENTS, beginning of period
148,315 497,114 73,214 CASH AND CASH EQUIVALENTS, end of period
128,834 303,329 44,674 Net increase (decrease) in cash (19,481)
(193,785) (28,540) ChinaEdu Corporation Reconciliations of non-GAAP
results of operations measures to GAAP measures Three Months Ended
Septembe September June September r (in thousands, unaudited)
30,2007 30,2008 30,2008 30,2008 RMB RMB RMB US$ Income (loss) from
operations GAAP Result (11,696) 22,891 (1,484) (218) Share-based
compensation 1,180 1,671 1,494 220 Exchange loss -- -- 1,433 211
Amortization of intangible assets 2,167 2,262 2,142 315 Goodwill
impairment 16,192 -- 17,857 2,630 Accounts receivable write-off
from prior owner of International Curriculum Program 4,031 -- -- --
Adjusted income (loss) from operations (Non-GAAP) 11,874 26,824
21,442 3,158 Adjusted operating margin 18.2% 33.7% 26.1% 26.1% Net
income (loss) GAAP Result (19,424) 9,187 (15,309) (2,253)
Share-based compensation 1,180 1,671 1,494 220 Exchange loss -- --
1,433 211 Minority interest for Share-based compensation (273)
(305) (194) (29) Amortization of intangible assets 2,167 2,262
2,142 315 Goodwill impairment 16,192 -- 17,857 2,630 Accounts
receivable write-off from prior owner of International Curriculum
Program 4,031 -- -- -- Deferred tax benefit for accounts receivable
write-off from prior owner of International Curriculum Programs
(636) -- -- -- Adjusted net income (loss) (Non-GAAP) 3,237 12,815
7,423 1,094 Adjusted net margin 4.9% 16.1% 9.1% 9.1% (Cont.) Nine
Months Ended September September September (in thousands,
unaudited) 30,2007 30,2008 30,2008 RMB RMB US$ Income (loss) from
operations GAAP Result 21,584 34,232 5,041 Share-based compensation
2,495 3,548 523 Exchange loss -- 1,433 211 Amortization of
intangible assets 6,381 6,659 981 Goodwill impairment 16,192 17,857
2,630 Accounts receivable write-off from prior owner of
International Curriculum Program 4,031 -- -- Adjusted income (loss)
from operations (Non-GAAP) 50,683 63,729 9,386 Adjusted operating
margin 27.3% 27.6% 27.6% Net income (loss) GAAP Result (6,950)
(4,035) (594) Share-based compensation 2,495 3,548 523 Exchange
loss -- 1,433 211 Minority interest for Share-based compensation
(509) (583) (86) Amortization of intangible assets 6,381 6,659 981
Goodwill impairment 16,192 17,857 2,630 Accounts receivable
write-off from prior owner of International Curriculum Program
4,031 -- -- Deferred tax benefit for accounts receivable write-off
from prior owner of International Curriculum Programs (636) -- --
Adjusted net income (loss) (Non-GAAP) 21,004 24,879 3,665 Adjusted
net margin 11.3% 10.8% 10.8% ChinaEdu Corporation Reconciliation
from net income to adjusted EBITDA (*) Three Months Ended September
June September September (in thousands, unaudited) 30,2007 30,2008
30,2008 30,2008 RMB RMB RMB US$ Net income/(loss) (19,424) 9,187
(15,309) (2,253) Minority interest 5,065 8,415 7,397 1,089 Income
tax provision 2,505 9,425 8,769 1,291 Exchange loss -- -- 1,433 211
Interest income and other,net 158 (4,136) (2,341) (345)
Depreciation 1,997 2,903 3,005 443 Intangible Amortization 2,167
2,262 2,142 315 Land use right amortization 133 141 142 21 Goodwill
impairment 16,192 -- 17,857 2,630 Accounts receivable write-off
4,031 -- -- -- Share-based compensation 1,180 1,671 1,494 220
Adjusted EBITDA 14,004 29,868 24,589 3,622 Adjusted EBITDA margin
21.4% 37.6% 30.0% 30.0% (Cont.) Nine Months Ended September
September September (in thousands, unaudited) 30,2007 30,2008
30,2008 RMB RMB US$ Net income/(loss) (6,950) (4,035) (594)
Minority interest 16,509 23,943 3,526 Income tax provision 12,484
23,094 3,401 Exchange loss -- 1,433 211 Interest income and
other,net (459) (8,770) (1,292) Depreciation 5,998 8,642 1,273
Intangible Amortization 6,381 6,659 981 Land use right amortization
392 424 62 Goodwill impairment 16,192 17,857 2,630 Accounts
receivable write-off 4,031 -- -- Share-based compensation 2,495
3,548 523 Adjusted EBITDA 57,073 72,795 10,721 Adjusted EBITDA
margin 30.8% 31.5% 31.5% (*) Definition of adjusted EBITDA:
earnings before interest, taxes, depreciation, amortization,
share-based compensation, exchange loss, minority interest,
goodwill impairment and accounts receivable write-off. For more
information, please contact: Company Contacts: Lily Liu, CFO
ChinaEdu Corporation Phone: +86-10-8418-6655 x1002 Email: S. Jimmy
Xia, IR Manager ChinaEdu Corporation Phone: +86-10-8418-6655 x1150
Email: DATASOURCE: ChinaEdu Corporation CONTACT: Lily Liu, CFO,
+86-10-8418-6655 x1002, or , or S. Jimmy Xia, IR Manager,
+86-10-8418-6655 x1150, or , both of ChinaEdu Corporation Web site:
http://ir.chinaedu.net/
Copyright
Chinaedu Corp. ADS, Each Representing Three Ordinary Shares (MM) (NASDAQ:CEDU)
Historical Stock Chart
From Jun 2024 to Jul 2024
Chinaedu Corp. ADS, Each Representing Three Ordinary Shares (MM) (NASDAQ:CEDU)
Historical Stock Chart
From Jul 2023 to Jul 2024